Bitwise Chief Investment Officer Matt Hougan has outlined a long-term forecast for Bitcoin, projecting its price could reach $1.3 million by 2035. The prediction is based on a unique valuation model that ties Bitcoin’s potential growth to the performance of the gold market. Hougan emphasized the increasing interest among institutional investors, noting that 12 major platforms managing trillions of dollars have requested these capital market assumptions within the past year.
For years, institutional interest in Bitcoin remained minimal, but that has drastically changed. Institutions ranging from national account platforms to large financial advisor groups are now seeking frameworks for incorporating Bitcoin into their portfolios. This shift highlights the growing recognition of Bitcoin as a legitimate asset class, especially in times of currency uncertainty. Harvard University’s substantial purchase of Bitcoin, alongside a $250 million investment in gold, further underscores this shift, showing Bitcoin's emerging role in diversifying institutional portfolios.
Bitcoin Valuation Linked to Gold Market’s Performance
Bitwise’s valuation model projects Bitcoin could expand from its current 9% of gold’s market cap to 25% by 2035. The model assumes Bitcoin will continue to capture a larger slice of the market share as gold maintains its historical growth trajectory. If Bitcoin retains its current 8% share, it could easily surpass the $1 million mark without relying on extreme assumptions. This growth would mirror the expansion of gold’s market, which has grown from $2.5 trillion in 2004 to $27 trillion today.
Bitcoin’s relatively low correlation with traditional assets, such as equities and bonds, has contributed to its appeal among investors. Over the past decade, Bitcoin's correlation with equities stood at a modest 0.21, indicating that Bitcoin often moves independently of traditional markets. While the correlation is expected to rise slightly due to central bank policies affecting all asset classes, it remains below the threshold of 0.5, meaning Bitcoin still holds its value as a non-correlated asset.
Bitcoin's Returns and Volatility Outlook
Bitwise forecasts Bitcoin will deliver an impressive 28% annualized return over the next decade, significantly outpacing traditional assets like stocks and bonds. Volatility has been on a downward trajectory since 2012, with Bitcoin’s 30-day rolling volatility steadily decreasing. This trend mirrors gold’s behavior following the end of the gold standard. While Bitcoin's volatility is expected to continue decreasing, it will likely remain higher than traditional assets like private equity.
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